FTSE 100 up as US economy grows

Thursday 29th October 2009

The FTSE 100 rose 1.13 per cent on Thursday with the news the US economy has grown for the first time since 2007.

At close, the index was up 57.30 points to 5,137.72.

Traders were buoyed by the US economy growing 3.5 per cent in the third quarter of 2009.

However, doubts still remain over the strength of the US recovery, as much of the growth has been fuelled by the economic stimulus plan.

At 12:55 EDT (16:55 GMT), the Dow was up 1.63 per cent to 9,921.69 and the S&P 500 climbed 1.82 per cent.

Leading the gains in London was Royal Bank of Scotland up 9.52 per cent to 43.37p, while Lloyds Banking rose 7.50 per cent to 86.00p.

Both were aided as Lloyds Banking revealed it was in advanced talks with the European Commission over restructuring to meet state aid rules and with the Treasury over its participation – or non-participation – in the government's toxic asset insurance scheme.

Miners provided the backbone for the gains.

Xstrata gained 7.37 per cent, Kazakhmys climbed 6.56 per cent and Fresnillo rose 6.65 per cent.

Royal Dutch Shell B and A were down 3.02 per cent and 2.88 per cent respectively as the firm recorded a 62 per cent fall in earnings and warned a quick recovery was not expected.

AstraZeneca lost 1.33 per cent and BAE lost 1.22 per cent.

Nick Serff, market analyst at City Index, said: "Stock markets across the globe rebounded in mid afternoon trade, boosted by a better than expected US GDP number.

"The FTSE managed to lag the other major averages on the day, only rising by just over one per cent. Wall Street managed to trade up over 1.5 per cent in early trade with the DAX and CAC also up more then the FTSE."

He added: "Investors have been buying into the move lower over the past few days and have used today's rally to reduce some of their exposure.

"A long bias is likely to remain as long as the FTSE holds above the psychologically important 5000 level."

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